[Case Information] This case is a decision that concluded with the reversal of the first-instance ruling, focusing on the issue of “removal from position (abolition of the Head of Management Department position).” Date of Decision: 2026-07-01 · Decision Body: Central Labor Relations Commission · Case No.: 2026Buhae24 Key Issue Summary: A. Whether the removal from position constitutes disciplinary action and whether there was business necessity It is reasonable to view the removal from position not as disciplinary action against the employee, but as a personnel measure accompanying an organizational restructuring decision—within the scope of business necessity and the employer’s considerable discretion—under which the Head of Management Department position was abolished. The removal from position resulted from organizational restructuring aimed at streamlining the organization and unifying the chain of command in response to a reduction in facility management personnel (from 6 to 3), and thus its business necessity is recognized … 1. Legal Implications This unfair dismissal decision by the Labor Relations Commission concerns whether the abolition of a managerial position and the discontinuation of the associated position allowance constituted a legitimate exercise of managerial prerogative. In this case, the employer prevailed before the Central Labor Relations Commission. Through this article organized by Labor Law Firm Law&, we examine the legal boundaries between removal from position, redundancy (collective dismissal), and disciplinary dismissal, as well as the criteria applied by the Labor Relations Commission. Ⅰ. Case Overview The employer implemented an organizational restructuring that abolished the Head of Management Department position, citing organizational streamlining and unification of the chain of command in a situation where facility management personnel were reduced from six to three. As a result, the employee concerned was removed from the Head of Management Department position. When the position allowance was no longer paid due to the abolition of the position, the employee filed for relief with the Labor Relations Commission, claiming that this constituted a de facto disciplinary measure or a disadvantageous disposition equivalent to unfair dismissal. Ⅱ. Issues in Dispute The core issue in this case is whether “the removal from the Head of Management Department position and the discontinuation of the position allowance constitute disciplinary action or unfair dismissal, or whether they are legitimate general personnel measures based on business necessity.” Further, the following questions also arose: “Did the reduction in wages resulting from the removal from position exceed the scope of ordinary livelihood disadvantages that an employee is generally expected to bear? And, in the course of this process, were the procedures required under the principle of good faith—such as consultation and explanation—properly observed?” Ⅲ. Summary of the Labor Relations Commission’s Reasoning The decision panel in this case found that it was difficult to regard the removal from position as disciplinary action, in light of the following: the employer abolished the Head of Management Department position itself; there was recognized business necessity in the form of reduced facility management personnel, organizational streamlining, and unification of the chain of command; and the removal from position was a personnel measure incidental to organizational restructuring, not a sanction imposed through disciplinary procedures. With respect to the discontinuation of the position allowance resulting from the removal from position, the panel held that this was a natural consequence of the abolition of the position and did not exceed the scope of ordinary livelihood disadvantages that an employee is generally expected to bear. It also found no procedural defects, noting that the employer had provided explanations and guidance to the employee regarding the removal from position and the discontinuation of the position allowance in accordance with the work rules. The panel concluded that no dismissal disposition existed in this case, and that the contested removal from position and discontinuation of the position allowance did not constitute disciplinary action but rather a legitimate personnel measure, and therefore could not be deemed unfair. Ⅳ. Practical Points (From the Employee’s Perspective) From the employee’s standpoint, removal from position or reduction of a position allowance does not always amount to disciplinary action or unfair dismissal. It is first necessary to examine whether the position itself was actually abolished and whether the necessity and substance of the organizational restructuring objectively exist. However, if the removal from position was based on disciplinary provisions, or if the livelihood disadvantage is excessive and markedly disproportionate compared to other personnel measures, it may be possible to challenge it as an unfair disadvantageous treatment equivalent to disciplinary action. Accordingly, employees should carefully review the work rules, personnel regulations, and the usual level of position allowances. Ⅴ. Practical Points (From the Employer/Company Perspective) From the employer’s perspective, in order for removal from position or adjustment of a position allowance to be recognized as a personnel measure rather than disciplinary action, it is important to clearly document, in writing, the necessity and process of the organizational restructuring and whether the position has in fact been abolished. In addition, as in case law on transfers and removal from office, employers should balance business necessity against the employee’s livelihood disadvantages and comply with explanation and guidance procedures based on the work rules, so that the measure is not evaluated as a violation of the principle of good faith or an abuse of rights. As in this case, the Labor Relations Commission tends to make a comprehensive assessment not only of the nominal label of “removal from position,” but also of the actual purpose and background of the personnel measure, the substance of the organizational restructuring, the degree of livelihood disadvantage, and whether procedures were followed. Therefore, when planning similar personnel measures, employers are advised to consult sufficiently in advance with experts such as Labor Law Firm Law&. 2. Matters Decided A. Case Overview and Procedural History This is a case in which the Commission held that the removal from position and the discontinuation of the position allowance were not disciplinary measures but personnel measures within the scope of considerable discretion granted to the employer, that there was business necessity for such measures, that the discontinuation of the position allowance following the abolition of the Head of Management Department position was within the scope of what an employee is ordinarily expected to bear, and that there were no procedural defects, and thus the measures were legitimate. 3. Summary of the Decision A. Summary of the Labor Relations Commission’s Reasoning (1) Whether the removal from position constitutes disciplinary action and whether there was business necessity It is reasonable to regard the removal from position not as disciplinary action against the employee, but as a personnel measure resulting from the abolition of the Head of Management Department position pursuant to an organizational restructuring decision—made within the scope of business necessity and the employer’s considerable discretion. The removal from position resulted from organizational restructuring aimed at streamlining the organization and unifying the chain of command in response to a reduction in facility management personnel (from 6 to 3), and thus its business necessity is recognized. (2) Degree of livelihood disadvantage resulting from the removal from position The fact that the employer ceased paying the position allowance to the employee following the removal from position is deemed a natural consequence of the abolition of the Head of Management Department position due to organizational restructuring based on business necessity, and is within the scope of ordinary livelihood disadvantages that an employee is generally expected to bear. (3) Compliance with consultation procedures required under the principle of good faith The employer provided explanations and guidance to the employee regarding the removal from the Head of Management Department position and the discontinuation of the position allowance in accordance with the work rules; therefore, there were no procedural defects. [See More Related Decisions] - “Unfair Dismissal Decision on ‘Business Necessity (Reassignment of Cleaning Staff)’” - “Unfair Dismissal Decision on ‘Appropriateness of Disciplinary Measure (Participation in Outsourced Work for Another Institution)’” - “Unfair Dismissal Decision on ‘Excessive Disciplinary Measure (Negligent Management/Supervision)’” [Tags] Unfair dismissal, removal from position (abolition of Head of Management Department), performance evaluation · poor performance, others, Labor Law Firm Law&, large labor law firm, Samseong-dong labor law firm, Samseong Station labor law firm, Gangnam labor law firm ※ This article is part of the “Unfair Dismissal Decisions” series by Labor Law Firm Law&. ※ The previous article, “Unfair Dismissal Decision on ‘Justifiability of Transfer (Replacement of Union Operations Manager)’,” can be viewed in a new window. ※ The list of decisions related to removal from position (abolition of Head of Management Department) can be found in the “List of Decisions Related to Removal from Position (Abolition of Head of Management Department)” page. ※ Korean version of this case: Korean article